Despite a slight increase in Canada's inflation rate last month, the Bank of Canada remains determined to bring it down to 2%, with the possibility of another rate hike being considered in September. However, some economists believe that the positive overall figures may allow the Bank to pause on rate increases without a significant negative impact.
The Bank of Canada may shift its focus from the output gap to labor market indicators, such as unemployment and wages, in order to make inflation forecasts and guide its interest rate decisions, according to a report by CIBC economists. The report suggests that the labor market has become a more reliable indicator of excess demand or supply, and forecasts that if the job market outlook suggests it's not necessary, there may be no more rate hikes this year and rate cuts in early 2024.
The Canadian dollar strengthens slightly against the US dollar in August despite concerns about China's economy and a decline in commodity-linked currencies.
The US added more jobs than expected in August, but the unemployment rate increased, while average hourly earnings and nonfarm payrolls growth were slightly below forecasts.
The US added 187,000 jobs in August, but the unemployment rate rose to 3.8 percent, indicating a plateau in the labor market as the Federal Reserve considers another interest rate hike.
The US job market shows signs of slowing but remains resilient, with 187,000 jobs added in August and a rise in the unemployment rate to 3.8%, as more people actively look for work. Wage gains are easing, signaling a potential slowdown in inflation, and the Federal Reserve may decide against further interest rate hikes.
Canada's economy unexpectedly contracted in the second quarter, raising concerns of a possible recession, as declines in housing investment and slower exports and household spending impacted growth. This is likely to lead the central bank to hold interest rates steady.
The Canadian dollar strengthened against the US dollar as stronger-than-expected jobs data raised the possibility of another interest rate hike by the Bank of Canada.
Canada's economy added nearly three times the expected number of jobs in August, with wage growth also accelerating, indicating underlying strength despite high interest rates.
Canada's employment insurance (EI) premium rate will increase by three cents in 2024, according to the Canada Employment Insurance Commission, as the country aims to strengthen its social safety net and support its growing labor market.
Economists predict that Canada's inflation rate is likely to increase to around four percent in August, mainly due to higher gasoline prices, reversing the previous progress made.
The Canadian dollar edged lower against the US dollar but still maintained a weekly gain due to higher oil prices and the possibility of more interest rate hikes by the Bank of Canada.
The Canadian economy has entered a long-delayed recession due to highly indebted households, overvalued home prices, and a slowdown in consumer spending, with the recession expected to last until the first quarter of 2024 and result in a 1.5% decline in GDP and an increase in the unemployment rate to 7.2%.
High inflation is leading to increased labor action in Canada as workers demand higher wages to combat the eroded purchasing power caused by rising costs of living, according to a report by RBC Economics. The report suggests that taming inflation is crucial to restoring peace in labor relations in the country.
Alberta Premier Danielle Smith plans to leave the Canada Pension Plan and set up an alternative provincial pension system, citing potential cost savings and more stable benefits, despite the Canada Pension Plan Investment Board doubting the credibility of the province's math; Canada's worsening diplomatic feud with India over allegations of Indian agents being involved in the killing of a Canadian citizen has led to the cancellation of a planned trade mission and the suspension of trade agreement talks; Union wage settlements in Canada are spiking following years of lagging behind inflation, potentially complicating the Bank of Canada's inflation efforts and leading to more labor disputes; Canada's inflation rate rose to 4% in August, driven by rising gasoline and rent prices, increasing the likelihood of another interest rate increase; Ford Motor Co. of Canada and the Unifor union have reached a deal to avert a strike by auto workers, subject to ratification; The best place to retire in Canada income-wise varies geographically, with generally better numbers from east to west and south to north.
US job growth exceeds expectations, with 336,000 jobs added in September, increasing the likelihood of further rate hikes by the Federal Reserve, while in Canada, job gains of 63,800 in September and soaring wages also raise the chances of another rate hike.
